Jacksonville Florida Short Sales FAQ: How will a Short Sale Affect My Credit?
Most sellers want to know this questions, because eventually, they would like to own a home again. Some sellers, worry about their security clearance. In Jacksonville, we are a military town, so that question comes up alot. With short sales it seems there’s no easy answer and when there is one, it changes.
So let’s talk about the process of doing a short sale. Usually you have a hardship that is interfering with the ability to pay your mortgage, or you have to move for whatever reason. Some lenders, require that you have to be late in order to even be considered for a short sale, while a small few do not. If you are in the lucky group, where the lender considers the short sale even if you’re still paying your mortgage, then you will save the damage of late pays. That’s huge, and sometimes the first late pay is 100+ points off your credit score. So, you continue making your payment, all the way up to the closing of your Jacksonville Short Sale home. After 30, 60 days or so, the lender reports on your credit, paid for less than agreed or short pay, or settled. There are many ways it can be worded.
The homeowners who can’t make their payments, understand the biggest hit to your credit is the first late pay and expect your credit to get beat up along the way until your home closes. Here is a chart that shows short sale vs foreclosure, I include it so you can see how each situation affects your credit. You will notice that a short sale does not affect security clearances like a foreclosure does.
Another form, shows the waiting time requirements for derogatory situations and when you can purchase a home again. You will notice you could get into a home using an FHA loan as little as 12 months, if you had made all your mortgage payments on time and your other payments were paid on time. Other loans, you may have a wait time of 2 or more years.
So as you can see, there are many variables to how much of a hit your credit score will take and when you can expect to buy a house again.
Here’s my advice and it comes from a sincere heart: After you have completed your short sale, don’t rush back into home ownership. Rent for a little while. Take a hard and honest look at your financial situation and determine what you could have done different, to have prevented the short sale in the first place. Sometimes, there are situations out of our control, but be honest, in most situations, there is always something we could have done differently that would have helped us. For example, being debt free and having an emergency fund.
I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.
Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at firstname.lastname@example.org.
Coming soon, more Jacksonville Florida Short Sales FAQ: